RF's Financial News

Sunday, June 30, 2013

During a question and answer session
a week ago, The Ben Bernanke hinted that he wouldn't mind seeing QE start to
taper off later in the year, and maybe end in 2014. While he didn't make a single actual move, the
markets all around the world reacted violently. I personally do NOT
believe QE will end. If the mere mention
of it ending tosses the market around for hundreds of points, and pushes bond
yields up so fast (the likes of which we’ve never seen before) – what would
happen if they really did end it? The
results would be catastrophic. The ‘wealth effect’ would be gone.The ‘wealth effect’ comes from seeing asset
prices rice, and realizing (if you own those types of assets) that you are
implicitly wealthier than before.The
‘wealth effect’ causes people to feel better and therefore, spend money on
things that they don’t need – with (potentially) money that they don’t have.

Can you imagine what would happen if
the Fed stopped pushing $85B per month into the economy?To quote Peter Schiff:“Although Bernanke dodged the question in his
press conference, the Fed has broken the normal market for mortgage backed
securities (MBS). While it's true that
the Fed only owns 14% of all outstanding MBS’s, it is by far the largest
purchaser of newly issued mortgage debt. If the Fed were no longer buying, there are not
enough private buyers to soak up the issuance. Those who do remain would certainly expect
higher yields.To put it bluntly, rates
would increase dramatically if there would be any mortgage market at all.”The ‘wealth effect’ would then work in
reverse: spending, confidence and home prices will fall, foreclosures and
unemployment will rise, and we will be in a recession even before the Fed
begins to taper.

Ah, but remember those words ‘budget
deficit?’ Well if we are spending a huge amount each year to service our
debts in a ‘zero interest rate policy’ world, how are we going to service them with
rates increasing dramatically? Our
national debt would soar once again.The
Fed has built an economy based on the Fed. Our Federal Reserve System has gone from hiding in the shadows,
to being our masters. In the 60's and
even into the late 70's, you based your investing on the economic growth of the
economy and the individual companies that were sharing in that growth. You watched corporate expenses and profits and
you loaned them your money because you felt that they'd use it wisely, and
return both a dividend and possibly some capital appreciation. Today that
notion is as old fashioned as curing you with leeches. Today we don’t care about earnings, revenues,
or marking assets to market; but rather all we care about is the Federal
Reserve and if they will keep rates artificially low.

Which brings up the question: What is the Fed's
next move? What ever it is, it has to be
a change from what they're doing because the current path simply isn’t
working.But let’s not forget, the Fed
doesn't work in a vacuum, but rather works with other Central bankers from
other nations on a total agenda.So,
what is that agenda? I think Gold
is telling us that agenda. I know this
will sound somewhat cloak and dagger – but as the title suggests – this time it
could be different.This time we're not
talking about a few trillion dollars in debt between a few nations. This time we are talking hundreds of trillions
in debts, and inflating the money simply won’t catch-up with all the debts that
need to be paid. There needs to be a
bigger, bolder plan.

My guess is that when Asia gets enough gold to
make a stand with their currency, they're going to call for a global ‘reset’. I think that all of the major currencies and
nations will be called upon to enter into some form of Bretton Woods type of plan
- where everyone resigns debts and we all issue a new global reserve
currency.It appears that this currency
will require some metal backing. If
you think about it like that, you can make some sense out of the incredible
attacks on Gold. In the 30's when they
wanted to re-price dollars, they passed a law making it mandatory that everyone
turn in their gold. It was the largest
confiscation of wealth on record. Well, instead
of having people turn in their gold – what if they get all that they need by reducing
the paper price and chasing people away from investing in it? We’re seeing a massive move of gold to
Asia.It feels like this coordinated
attack on the metals is being done to allow the Asians the opportunity to amass
enough gold that when they pull the plug on dollars, everyone can meet at the
table with enough physical gold that a new standard can be issued. I think the agenda is to allow the major nations
the ability to obtain the physical metal, and then cut free of the current
system of reserve dollars.

I might be crazy, but no amount of money
printing is going to cure the debts. The
EU is all but bankrupt. The US cannot
mathematically pay off its debts. China
is slowly admitting to building several unsustainable bubbles. Japan is a nightmare. But it’s different this time. This isn't one nation struggling – like Argentina.
These are the major economies of the
planet dying in debt. No amount of
inflating the money supply will take away the ills of the world’s current
overactive debt problem.Gold’s message
is that nations need to obtain it.

But there is one catch – there is not enough physical gold to be
purchased.When gold was rising in price
– people were buying it.When gold is
falling in price – people are buying it.Why does it take 7 years to give back
Germany's gold? They first must find
enough of it to ‘give back’.So this
time could be different.We could be
looking at a global currency reset.How
it all plays out – I’m not certain, but it is the most logical path.

The Market....

Ever since Bernanke chatted about wanting to
taper QE this year, and end QE next year – just about everything has sold off. I’ve consistently said that they can’t end QE because
if they do, we crash. But what if the debts are so enormous and the
possibility of inflating our way out so impossible – that once all the nations
have enough gold, they will:

-Back away from the stimulus.

-Let things crash.

-Rebuild from the
ashes.

-Write off the debts.

-And introduce a new
global reserve currency?

That is a hard pill to swallow. All Central bankers have ever known is to
continue to print more money, and to inflate away problems. But since this isn't just one single country,
and the debts aren't just a few trillion, can it actually be that they're going
to give up? Is that why The Ben Bernanke
is so hot on the idea of him leaving? He
made his life’s work about what the depression experts did wrong, and he said
that he could solve a similar situation. Maybe he just wants out before they do indeed
yank the plug on the whole darn system.

If that is the ‘final solution’, then we are in
a whole new ball game. Don't get me wrong;
I’m not there – yet. I think it is
something to ponder, and dissect into its component parts. But if that becomes the case:

-We would become
deflationary.

-Economic activity
would slow to a crawl.

-Prices would crash
because no one would buy anything.

-Stocks would fall
below 2008 levels.

-It would be the
"Greater Depression".

If however they are going to continue on the
printing press bandwagon, then the situation remains relatively the same. They continue to print, stocks hold up or even
rise, and the distortions become even larger.

Stocks have entered what looks to be their first
significant correction since November of last year. From the May highs we've drifted sideways and
down, and the volume on the down days far exceeds the volume on the up days. At our lowest point we had about a 6.2%
correction – the deepest of the year. We
then ran back up and tried to get over the 50-day moving averages in the big
indexes, but it wasn't to be. Thursday’s close was not above them, and Friday slid
back another 115 DOW points. Last week I thought that we'd rally back up, test the 50-day moving averages,
and if we failed to break through them, we would drift down again.If I'm right about that scenario, what should
happen is that we fade back down and re-test the 14,650 area. If that area doesn't hold, we could see a real
10% pull back (something new this year) and a long way down.

In a very strange twist, the only sector showing
incredible strength on Friday was the gold and silver miners.All in all, the key word (especially for the
“long only” investor) is to please be careful.This market could easily break in either direction. Earnings season is fast approaching, and it
isn't going to be pretty.They will have
to do a lot of spin to try and make these upcoming earnings look acceptable. In any event, listen for the Fed heads talking
about QE, and try not to get too involved long or short. Volatility will rule the week.

Tips:

My
currentshort-term holds are:

-SIL – in at 24.51 (currently 11.72) – no stop

-GLD (ETF for Gold) – in at 158.28, (currently
119.21) – no stop ($1,223.80 per physical ounce), AND

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author, RF
Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.

Please
write to <rfc@getabby.com>
to inform me of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of my thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing:http://www.youtube.com/watch?v=K2Z9I_6ciH0

To
unsubscribe please refer to the bottom of the email.

Views
expressed are provided for information purposes only and should not be
construed in any way as an offer, an endorsement, or inducement to invest and
is not in any way a testimony of, or associated with Mr. Culbertson's other
firms or associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a
substantial amount of his or her investment. Often, alternative investment fund
and account managers have total trading authority over their funds or accounts;
the use of a single advisor applying generally similar trading programs could
mean lack of diversification and, consequently, higher risk. There is often no
secondary market for an investor's interest in alternative investments, and
none is expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

Monday, June 24, 2013

There’s a certain humility that comes over you
after you spend 3 days on a university campus – away from all the world’s
hustle and bustle – and focused solely on celebrating the Class of 2013 at
Northwestern University.I’m truly
humbled by their intellect – and sincerely apologize for the financial ‘mess’
that we’ve left them.But none the less,
Congratulations to the Class of 2013.

Financially, I'd venture to say that just about everyone
knows what happened on Wednesday.Without actually saying the words, The Ben Bernanke hinted that he would
like to see a tapering off of the Quantitative Easing (QE) by late this year. That caused a 400+ point drop in the stock
markets over the next two days.I
received an email from someone that summed it up quite nicely: "It would
seem that if the market fell 440 points in two days over the mere mention of
tapering, I believe your are right that when they ‘actually taper’ we will have
all hell to pay".

But it wasn't just stocks that were getting hammered.
Gold, silver, copper, lumber, bonds,
swaps – virtually everything was getting hit.The unwinding of an out of control policy – that tried to keep interest
rates at 0 for too long – isn’t pretty and will cause issues we currently don’t
understand.This unwinding could easily
become truly catastrophic. The world is in a massive debt bubble and the
Central banks are now officially losing control. And according to Donald Trump, the stage is
now set for a possible collapse that dwarfs 2008. Speed is the real issue right now. If the wheels come off slowly (as has been the
case in Europe), they will continue to plug the holes by printing more cash,
and kick the can down the road. But, if
a chain reaction were to occur, where derivatives start to default, that
could freeze up the entire banking system – circa 2008.

I'm on record as saying the Fed won't stop
printing. There have only been two
choices: (a) continue to print and ‘inflate-away’ our debts, or (b) stop
printing and have the economy go into a recession/depression.We either take the pain, allow business to
fail, banks to go belly-up, endure a year or two of a horrible economy, or
print money to keep the wheels turning. I
think the Fed will continue to print.

If The Ben Bernanke wants to step down in January,
he could cut a bit of stimulus on his watch, and then his replacement could make
a determination that we are just too early for less stimulus and jack it back
up – potentially higher.Why do I think The
Ben Bernanke won't stop printing? His
entire career is based upon knowing what the Central bank did during the Great
Depression was wrong.He told everyone
that he had tricks and gimmicks and could solve any depression. He would look very bad if he quit printing and
the economy imploded on him.Similarly,
his replacement isn't going to want a world depression on his or her watch, and
the only way to ward that off is to print more and more. Therefore, in my opinion, a year from now we
will still have QE (in some form) and it will potentially be larger than it is
today.

Which makes things even more bizarre when we
look at what happened to commodities this week.On Thursday Gold was down $90 an ounce. Yet (once again) demand for the physical metal
went through the roof.Understand, there
must be quite an agenda behind debasing the commodities, because you just don’t
‘naked short’ the precious metal market (time and time again) – just because
it’s a fun thing to do.The agenda must
include migrating gold from west to east.China has seen what many different dynasties have done for money, and
know that gold has gotten them through all of it.China
wants all the gold it can get because (in my opinion) they would like the Yuan
to be part of the global currency reserve, and would like gold to back some
percentage of it.But that creates a
problem for the European central banks, and they will need gold to be a part of
their currency as well.

We currently have Central banks being quite
aggressive about their gold purchases.Therefore it makes sense for them to drive the paper price lower, and
potentially drive buyers into other risk assets such as currency or stocks.Along with attacking the prices, there are
other ways to keep the physical metal out of people’s hands:

-FedEx
has stopped delivering precious metals to individuals in the UK and Germany.

-On May
23, France passed a law prohibiting their postal service from delivering gold
to the public.

-And the
Chicago Mercantile Exchange (CME) just increased margin requirements on Gold by
a whopping 25%.

So, where are we?

-We have
The Ben Bernanke winking and nodding that QE is going to start to taper.

-We have
the market in panic model.

-Gold and
silver were sold off on the upside down belief that there will be less Fed
inspired inflation.

-Interest
rates are soaring with mortgages costing 3.5% a couple weeks ago to 4.12% this
Thursday. If the economy is to return on
the back of housing, then higher interest rates will let housing die on the
vine.

If indeed the Fed was to stop QE, who would buy the
treasuries that Japan and China don't purchase, and at what interest rate? My guess is that we will begin to hear about a
new Government program to make you buy bonds for your retirement fund (like
they are making us buy Obamacare). Last week
$13.6 Billion came out of the bond markets.People are frightened about Benghazi, the IRS, the NSA, Afghanistan,
Iran, Syria, employment, debt, higher taxes, Obamacare – and the list goes on. The
single element that people were able to feel better about has been the stock market
and now that is scaring the hell out of them. That 5% correction could have repercussions.People can't
hide in gold or silver, Bonds are plunging, stocks got whacked – they don't
know what to do. I certainly understand
that, and there is something ‘different’ about his market downturn.

I wanted to end on a positive note, but it is
hard. The pieces of the puzzle are
coming together faster and faster, and the picture they create is one of deep
economic trouble ahead. One thing I
suggest is that for the next several months – consider putting 6 months worth
of living expenses (in case) in a good home safe.Why – because if a cascade of crazy stuff
happens one night, starting in Japan and spreading across Europe and into the
US, I could easily see a banking system shut-down (for several days) as they would
try and sort out all of the derivative nightmares. This is a pretty
good time to really be cautious. Sorry –
it just feels that way.

The Market:

After a 400+ point drop, we only managed to claw
back some 40 points on Friday. That
means a lot of the money simply wasn't willing to jump back into the market
just yet.So the Fed supported things,
but this time they didn't really "buy the dip".

Historically June is the worst market month. After 7 months of "up", we’ve had our
first really big plunge, and it was overdue. I've said for two weeks that this time ‘feels
different’, almost like they're losing control all across the globe. When they're selling virtually everything from
commodities to stocks to bonds, it is hard to decipher where the buyers are
going to pop up next.

We're only down about 5% from the all time highs
set in May. A typical correction is between
8 - 10%, and thus far they haven't been willing to let that happen.A lot of profit has been made, and no one is
going to want all to slip away.And if you
hadn’t noticed, the market volume on Thursday was the HIGHEST volume
of the year – and it was ALL to the downside.

My guess is that we have a bit more work to do
on the downside before all the players decide to come back in. The only reason it doesn't feel like we are
just heading down for good is because of all The Ben Bernanke bluster. I don't think this Fed inspired market run is
over yet, although obviously it is looking fragile. Patience is
the key. We need to let the market come
to us. Right now with everything from
the DOW to the S&P to the XLF (the banking ETF) are all at or below their
50 day moving averages. Too many days
like that, and the market mood will turn negative instead of profit taking &
buy-the-dip.

All that said, if we were to fail Friday's S&P
low of 1577, and end the day there – then it would seem apparent that the
overall direction is going to be considerably further down – and going short a
little there would probably be nicely profitable.

There's no question about this – this is not
your every day shake out. A lot of
damage has been done, and folks are scared. Volatility will soar in the next few days. If you can't be ‘trading-wise’ nimble, then I
don’t see a reason to play right now.There is a lot of gold and silver technical jargon being spoken, but
frankly I don’t believe any of it any more. The precious metals are being systematically
attacked in a way never seen before. This
isn't a normal market function. Over in
Asia, they once again lined up for hours to buy physical gold. This is a fight to the death between the folks
that want the metal versus the Central banks.It is truly an ugly fight, and I just continue to nibble away on the
dips.The way the global economic
picture looks, I can think of nothing better to do. Not just in the U.S. but
all around the world. People will be selling
everything to raise cash. When it all
falls at the same time, (stocks, bonds, & gold) you know there's some
underlying panic. I want to buy some of
that panic.

Good luck out there. Be careful. Don't jump the gun long or short. Buckle your seatbelt because we're going for
quite the ride.

Tips:

This
week we sold out of MUX – otherwise we did very little.

My
currentshort-term holds are:

-SIL – in at 24.51 (currently 13.60) – no stop
yet

-GLD (ETF for Gold) – in at 158.28, (currently
134.55) – no stop ($1,387.30 per physical ounce), AND

Expressed
thoughts proffered within the BARRONS REPORT, a Private and free weekly
economic newsletter, are those of noted entrepreneur, professor and author, RF
Culbertson, contributing sources and those he interviews. You can learn more and get your free
subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.

Please
write to <rfc@getabby.com>
to inform me of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<rfcfinancialnews.blogspot.com>.

If
you'd like to view RF's actual stock trades - and see more of my thoughts -
please feel free to sign up as a Twitter follower - "taylorpamm" is my handle.

If
you'd like to see RF in action - teaching people about investing - please feel
free to view the TED talk that he gave on Fearless Investing:http://www.youtube.com/watch?v=K2Z9I_6ciH0

To
unsubscribe please refer to the bottom of the email.

Views
expressed are provided for information purposes only and should not be construed
in any way as an offer, an endorsement, or inducement to invest and is not in
any way a testimony of, or associated with Mr. Culbertson's other firms or
associations. Mr.
Culbertson and related parties are not registered and licensed brokers. This message may contain information
that is confidential or privileged and is intended only for the individual or
entity named above and does not constitute an offer for or advice about any
alternative investment product. Such advice can only be made when accompanied
by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note:
Joining BARRONS REPORT is not an offering for any investment. It represents
only the opinions of RF Culbertson and Associates.

PAST
RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS
THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING
ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER
VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE
INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT
TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES,
AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN
ONLY TO THE INVESTMENT MANAGER.

Alternative
investment performance can be volatile. An investor could lose all or a
substantial amount of his or her investment. Often, alternative investment fund
and account managers have total trading authority over their funds or accounts;
the use of a single advisor applying generally similar trading programs could
mean lack of diversification and, consequently, higher risk. There is often no
secondary market for an investor's interest in alternative investments, and
none is expected to develop.

All
material presented herein is believed to be reliable but we cannot attest to
its accuracy. Opinions expressed in these reports may change without prior
notice. Culbertson and/or the staff may or may not have investments in any
funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

Sunday, June 16, 2013

First - Happy Father’s Day.In my view, being a ‘dad’ is the second
toughest job – runner-up to being a ‘mom.’

What I’ve seen over the years, is that
often one person’s ‘conspiracy’ is tomorrow’s ‘news.’ On Thursday the CNBC anchor personnel were
‘shocked’ to find out that some of the high frequency trading desks receive
economic information before that same information is released to the public –
for a special fee. So the ‘big money folks’ are hyper trading on
information that we ‘common folk’ are not able to see at the same time – this
comes as a shock to who?

The public is also finding it a bit
scary that the NSA is privy to every single thing that they have ever done
electronically.The IRS has shown that
it has the ability to fight anyone that says things that go against ‘The State.’And given the IRS budget is virtually limitless,
if they target you or your organization – you (most likely) will be out of
money before you ever get your day in court.

But (the other day) I did see a ray
of hope.While shopping, the cashier
asked the lady standing in line in front of me: "Can I have your phone
number please?" The woman replied: "No! I see what you’re doing now.You guys can track my purchases by matching
my phone number with these items. Then you
can share that information with everyone else to see if it all makes sense. No thanks, I'm not doing any of that any more."She had seen the light.Will she stick to it? Who knows, but at least one light bulb turned
on.

Another light bulb turned on this
week when the national media declared: “Yes, the stock market is all about the
Fed policy, not the economy".The
media this week finally had to admit that after 6 years of stimulus and bailing
out banks, it’s not the economy leading the stock market, but rather the stock
market attempting to lead the economy.I
personally can't imagine how people actually believed that the economy was
recovering. No matter how hard I would
try and explain what was truly taking place, every week I would get mail
telling me that I was wrong.But now, it
seems a light bulb has turned on with our national media.

I’m glad the light bulb turned on,
but I fear that the media has only done its mea culpa because it ran out of
excuses and ways to explain the dichotomy. The media saw overwhelming unemployment,
falling corporate profits, manipulations and frauds on one hand, and on the
other hand a stock market that continued to climb higher.Last week seemed to be a ‘coming together’ on
the fact that ‘the recovery’ is nothing more than Central banks around the
world printing money like madmen. What
interests me however, is that people are beginning to wake up to the idea that
this entire rally could be fake.

Here is where the deep confusion
will set in. Everyone is finally
starting to believe that this is a rally manufactured by the Fed, and it will
end at some point, and when it does – it probably won't be pretty. However, nobody knows what to do about it.
Believe me, I understand the frustration. Just when people started believing that maybe
gold and silver were the right things to buy, the Central Banks attacked the
metals, sending them down hard, and scaring people away. It is going to take a strong leap of faith for
those who are just waking up to the world’s economic disaster to believe in
gold and silver. The good news is that
these attacks were NOT by accident. Central
bankers have done everything in their power to keep people away from saving, and
to keep people buying everything except precious metals.

Factually:

-The
metals are down in the paper futures markets; however, the demand for the metals
is still rising.

-All
around the globe people are paying fantastic premiums over the stated price for
gold and silver.For example:if the daily quote for gold is $1,375 / ounce
– a normal premium for physical gold would be between 2 and 4%.Currently, physical gold premiums have risen
to between 7 and 9.5%.So what is the real
price of gold?In Asia, the minimum price
of physical gold is $1,475 (a 7% premium over the spot price of $1,375).

-With
prices being down, demand for the physical metals is strong.However, at this rate Gold stores will be
‘out of (reasonably priced) deliverable gold’ in the not too distant
future.What happens then?

-Gold is
still flowing from West to East – with China increasing it’s holdings.As it continues to become difficult to deliver
the physical metal – the paper prices will become irrelevant and at that point
I believe a new Index of Gold will appear.This new Gold Index will reflect the ‘real physical price’ not a Central
Banker driven nightmare.

The
Market:

This week we put in the classic
bounce off of the 50-day moving averages.We were down three days in a row, touched the 50-day moving averages, the
trading bots kicked in, and boom up we went. Unfortunately Friday could not hold the gains,
and here we sit at 15,070 on the DOW and 1,627 on the S&P.

I’m nervous about the DOW closing
below 15,130.If we would have cleared
and held 15,250 – we could have talked about a classic ‘W’ shaped rebound.A classic ‘W’ is where a stock or index comes
down, then bounces, then comes down again and finally bounces back up.When the right side of the ‘W’ surpasses the
high of the middle of the ‘W’ (in this case 15,250) – it is often a strong buy
signal.Unfortunately we were down
triple digits on Friday, and therefore, need to defend the 50-day moving
averages – again on Monday.

I need ‘trends’ in order to play –
and right now – until we break under the 50-day moving average (around 14,950) or
over 15,250 – we’re in no man’s land.I’m
sitting tight. You can try day-trading the market,
taking some SPY or DIA's, but I would keep incredibly tight stops on any trades
– as this market could easily move in any direction.

If we fail the 50-day moving average
and plunge under 14,950, then all bets are off and we'll probably be looking at
a quick pull-down – taking the S&P down to the 1,600 level which is the
intermediate trend line of support.

So, I'll be a buyer of the DIA's and
the SPY if the DOW moves over 15,250, and/or the S&P moves over 1,650.

Tips:

This
week we sold out of ABX flat – otherwise we did very little except tread water.

My
currentshort-term holds are:

-MUX at 2.68 (currently 2.10) – stop at 1.60

-SIL – in at 24.51 (currently 13.60) – no stop
yet

-GLD (ETF for Gold) – in at 158.28, (currently
134.55) – no stop ($1,387.30 per physical ounce), AND

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Until next week – be safe.

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